Hybrid Forms of Third-Party Dispute Resolution: Theoretical Implications of

Combining Mediation and Arbitration

Author(s): William H. Ross and Donald E. Conlon
Source: The Academy of Management Review , Apr., 2000, Vol. 25, No. 2 (Apr., 2000),
pp. 416-427
Published by: Academy of Management

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@ Academy of Management Review
2000, Vol. 25. No. 2, 416-427.

NOTE

HYBRID FORMS OF THIRD-PARTY DISPUTE

RESOLUTION: THEORETICAL IMPLICATIONS
OF COMBINING MEDIATION AND
ARBITRATION

WILLIAM H. ROSS
University of Wisconsin at La Crosse

DONALD E. CONLON
Michigan State University

We contrast two hybrid dispute resolution procedures (arbitration-mediation and

mediation-arbitration) that involve using mediation and arbitration in different se-
quences. The former's strengths stem from lowering disputant expectations and en-
hancing cooperative behaviors during the mediation phase. The latter procedure
likely will be less costly and time consuming, enhance fairness judgments, and
produce greater compliance to arbitrated decisions. We argue that the greatest ben-
efit from arbitration-mediation is that it should encourage disputants to settle differ-
ences themselves.

The intervention of a third party-a person,
government agency, or other institution-often
can facilitate conflict resolution between disput-
ing parties (Conlon & Sullivan, 1999; Kressel &
Pruitt, 1989; Purdy & Gray, 1994). For example,
formal third-party procedures often are used for
public sector labor-management disputes,
where dispute resolution system designers want
to avoid strikes. Other contexts in which third
parties intervene include intraorganizational
disputes; small claims business disputes; and
consumer complaint disputes, such as in the
securities industry (cf. Kressel & Pruitt, 1989;
Lewicki, Litterer, Minton, & Saunders, 1994;
Podd, 1997). Although differences exist among
these third parties and the contexts in which
they serve, all fulfill similar roles and, thus, are
more alike than different. This reflects the "ge-
neric view" of conflict resolution (Levinger &
Rubin, 1994; Pruitt & Carnevale, 1993).
Our purpose here is to compare and evaluate
hybrid third-party dispute resolution proce-
dures. By hybrid we mean procedures that com-
bine elements of mediation and arbitration. We
believe such hybrid forms hold great promise for
managing conflicts, although such procedures
have been undertheorized conceptually. We an-
alyze two procedures: the well-known media-
tion-arbitration procedure and the novel arbitra-
tion-mediation procedure. We first briefly define
each and then identify criteria for evaluating
them. Next, we consider why disputants might
prefer one type of hybrid procedure, and, finally,
using these criteria, we consider the conse-
quences of choosing one type of hybrid proce-
dure for disputant behaviors, expectations, and
outcomes. Throughout this discussion, we de-
velop testable research propositions. We antic-
ipate that such an analysis will prove valuable
both to researchers and policy makers seeking
to design their third-party systems.
DISTINCTIONS BETWEEN MEDIATION AND
ARBITRATION

Our hybrid procedures reflect different combi-

We presented an earlier version of this work at the annual
nations of two well-established third-party
meeting of the Academy of Management in San Diego, Au-
gust 1998. We thank Elizabeth Wessman, Laura Jaryznski,
procedures: mediation and interest arbitration.
and the anonymous reviewers for comments on earlier ver- Mediation is a procedure whereby a third party
sions of this note. assists disputants in achieving a voluntary set-

416

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 2000 Ross
tlement (i.e., the mediator cannot impose a set-
tlement on the disputants). Interest arbitration
(or, more simply, arbitration) is a procedure
whereby a third party holds a hearing, at which
time the disputants state their positions on the
issues, call witnesses, and offer supporting evi-
dence for their respective positions. After eval-
uating the evidence and considering other rele-
vant factors (e.g., legal constraints and
economic conditions), the third party issues a
binding settlement (Elkouri, Elkouri, Goggin, &
Volz, 1997). Note that in the field of industrial
relations, interest arbitration often is used to
determine the terms of a new collective bargain-
ing agreement, and it stands in contrast to griev-
ance arbitration, which deals with the interpre-
tation of an existing collective bargaining
agreement. (We do not consider grievance arbi-
tration in this note.)
Both mediation and arbitration can be evalu-
ated according to the criteria of decision control
and process control, as described by Thibaut
and Walker (1975, 1978) and elaborated upon by
Elangovan (1995). Thibaut and Walker define
these terms as follows:
Decision control is measured by the degree to
which any one of the participants may unilater-
ally determine the outcome of the dispute. For
example, when a third-party decisionmaker
alone may order a resolution to be imposed, the
decisionmaker has total decision control. Control
over the process refers to control over the devel-
opment and selection of information that will
constitute the basis for resolving the dispute. Par-
ticipants given authority to conduct an investiga-
tion and to plan the presentation of evidence may
be said to exercise considerable process control
(1978: 546).
Mediation and adversarial arbitration both af-
ford the disputants high process control, for dis-
putants have ample opportunity to present in-
formation as they attempt to influence the
perceptions of the third party. However, the two
procedures differ in terms of decision control.
Disputants have high decision control in medi-
ation (they may reject any settlement suggested
by the mediator) but low decision control in ar-
bitration (they must accept an arbitration rul-
ing).
Both mediation and arbitration offer several
strengths. Mediation offers the possibility of dis-
covering underlying issues and promoting inte-
grative agreements (McEwen & Maiman, 1984;
McGrath, 1966). It produces a high settlement
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and Conlon 417
rate (typically 60 to 80 percent, although settle-
ment is not guaranteed) and high compliance
rates (Hoh, 1984; Kochan, 1979; Kressel & Pruitt,
1989). Mediation also is a face-saving procedure:
each side can make concessions to the other
without appearing weak. Finally, disputants of-
ten see mediation procedures as fair (Karam-
bayya & Brett, 1989; Pierce, Pruitt, & Czaja, 1993;
Ross, Conlon, & Lind, 1990).
The greatest benefit of binding arbitration is
that it always produces a settlement. Moreover,
the threat of arbitration often motivates parties
to settle voluntarily, because the parties give up
decision control once they arbitrate (Farber &
Katz, 1979). The procedure may produce speedy
settlements relative to other third-party proce-
dures, such as adjudication. Finally, arbitration
allows representatives to "save face" with con-
stituents, because they can blame the arbitrator
if the imposed settlement is unsatisfactory
(Marmo, 1995; Rose & Manuel, 1996).
COMBINING MEDIATION AND ARBITRATION
Recognizing the strengths of each procedure,
some scholars have advocated the adoption of
alternative, hybrid, third-party procedures.
Clearly, we cannot discuss all possible proce-
dural combinations here. Instead, we focus on
two different hybrid procedures in which both
mediation and arbitration components are uti-
lized fully: mediation-arbitration and arbitra-
tion-mediation. We focus on mediation-arbitra-
tion in part because it is the best-known hybrid
procedure (Devinatz & Budd, 1997; Kagel &
Kagel, 1972). We focus on arbitration-mediation
because it involves combining the same two
third-party procedures, albeit in a different tem-
poral sequence.
Mediation-arbitration (hereafter med-arb)
consists of two phases: (1) mediation, followed
by (2) arbitration, if mediation fails to secure an
agreement by a predetermined deadline. The
same third party serves as both mediator and
arbitrator (Kagel, 1976). The procedure is incre-
mental: only if mediation fails to produce an
agreement does the arbitration phase occur,
which culminates with the third party imposing
a binding settlement on the parties. This tempo-
ral arrangement is consistent with the sugges-
tions of many scholars (e.g., Ury, Brett, Goldberg,
1988), who argue that dispute resolution proce-
dures should be arranged in a "low-to-high-cost
 418 Academy of Management
sequence" for the users (Ury et al., 1988: 62-63).
Other writers also have suggested that media-
tion should precede arbitration (e.g., Starke &
Notz, 1981).
One relatively new hybrid procedure is arbi-
tration-mediation (hereafter arb-med). Briefly,
arb-med consists of three phases. In phase one
the third party holds an arbitration hearing. At
the end of this phase, the third party makes a
decision, which is placed in a sealed envelope
and is not revealed to the parties. The second
phase consists of mediation. The sealed enve-
lope containing the third party's decision is dis-
played prominently during the mediation phase.
Only if mediation fails to produce a voluntary
agreement by a specified deadline do the par-
ties enter the third phase, called the ruling
phase. Here, the third party removes the ruling
from the envelope and reveals the binding rul-
ing to the disputants (Cobbledick, 1992; Sander,
1993). To ensure that the envelope contains the
original ruling and not a later ruling (e.g., a
ruling created after the mediation phase), the
third party can ask a disputant from each side to
sign the envelope across the seal at the begin-
ning of mediation.
CONTRASTING THE TWO HYBRID
PROCEDURES
What criteria should be used for evaluating
the hybrid procedures? In order to compare med-
arb and arb-med systematically, we have organ-
ized our criteria (and our discussion) around the
following temporal sequence. Briefly, we pro-
pose that the parties desire to maintain control
over both the dispute resolution process and its
outcomes. This desire affects disputants' proce-
dural preferences and their resulting procedural
choice (if any choice is available). We also ex-
amine the consequences of using a particular
hybrid procedure for disputant expectations and
behaviors, as well as immediate and long-term
outcomes from using the procedure. This tempo-
ral sequence is a specific application of a gen-
eral model offered by Pruitt and Carnevale
(1993), and it serves as a framework to organize
our propositions in a logical fashion.
As we examine preferences, expectations, and
behaviors, we rely heavily upon Thibault and
Walker's (1975) notions of process control and
outcome (decision) control. We also incorporate
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findings from the decision-making literature,
where appropriate.
PROCEDURAL PREFERENCE
An important first question concerns dispu-
tant preferences for med-arb or arb-med. If of-
fered a choice of procedures (e.g., a "multi-door
courthouse"; see Olczak, Grosch, & Duffy, 1991),
will disputants prefer one hybrid procedure over
another? If so, why? Such questions are impor-
tant for three reasons. First, if they do not prefer
a particular procedure, the parties may avoid
using it, which may have implications for dis-
pute resolution system functioning (e.g., staff
and resources may be invested in procedures
that few disputants want or use). Second, the
parties may behave differently when using a
procedure they do not favor relative to one they
prefer, affecting both processes (e.g., the amount
of information revealed) and outcomes (whether
a voluntary settlement is reached). Third, the
parties' preferences may be related to justice
beliefs, which, in turn, may affect compliance
rates with imposed decisions; disputants may
be less likely to comply with decisions that were
reached using seemingly unfair procedures.
Building upon the Thibaut and Walker (1975,
1978) theory of procedure, as well as the work of
Deutsch (1973), we believe that for "interest-
based disputes" (rather than, say, disputes over
"mratters of principle"), disputants are primarily
motivated by self-interest (Pillutla & Murnighan,
1999). The consequences of this self-interest mo-
tive for procedural preference are numerous and
multifaceted. First, disputants seek to retain de-
cision control because it gives them veto power
over any third-party proposal that provides un-
acceptable outcomes (thereby protecting their
self-interests). Participants generally view a
procedure as fairer if they retain decision con-
trol, although they may be willing to relinquish
decision control if they are unable to settle the
dispute themselves (Heuer & Penrod, 1986; Lind
& Tyler, 1988). This suggests a preference for
dispute settlement during the mediation rather
than arbitration phase of hybrid procedures.
Second, to the extent that process control has
implications for favorable outcomes, disputants
seek to maintain process control. Research dem-
onstrates that disputants usually prefer such
procedures as mediation, where they retain sub-
 2000 Ross
stantial amounts of process control (Pierce et al.,
1993).
Third, disputants avoid situations where out-
comes cannot be determined in advance ("un-
certain" situations) or where the probability of
obtaining a favorable outcome is low ("risky"
situations; see Knight, 1921). Arbitration creates
such a situation, where parties cannot deter-
mine in advance which evidence will be most
compelling to the third party. To reduce such
uncertainty, each party may exaggerate its de-
mands and reduce its level of concession mak-
ing (a phenomenon known as the chilling effect),
hoping that the arbitrator will "split the differ-
ence" and give them a modestly favorable set-
tlement (Notz & Starke, 1987). The parties also
may employ impression management tech-
niques (Jordan & Roloff, 1997) designed to con-
vince the third party of the virtue of their respec-
tive positions (Wall, 1991).
What are the implications of these processes
for procedural preference among the two hybrid
procedures? With med-arb the parties retain de-
cision control during the mediation phase. The
parties exercise process control by engaging in
impression management during mediation; they
also exercise process control by presenting ad-
ditional evidence and formal arguments during
any subsequent adversarial type of arbitration
hearing. It is only at the end of the process that
they relinquish decision control. Thus, with
med-arb the parties retain process and decision
control longer and have greater opportunity to
reduce the uncertainty associated with receiv-
ing an arbitrator's binding decision.
In contrast, with arb-med the parties have
only one chance to influence the third-party's
binding decision-at the initial arbitration hear-
ing. Thus, although the parties technically re-
tain decision and process control throughout the
subsequent mediation phase, they must also
recognize that a binding decision has been ren-
dered already (only not yet "served") and that
any further impression management attempts
will be ineffectual. The early forfeiture of deci-
sion control, thus, is salient throughout the me-
diation phase of arb-med. Further, since the rul-
ing is displayed prominently in the sealed
envelope, the uncertainty of the outcomes con-
tained in that ruling also is made more salient.
Therefore, if our assumptions are correct-that
disputants seek favorable outcomes and seek to
avoid uncertain situations-we predict that, if
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and Conlon 419
given a choice between these two hybrid proce-
dures, disputants will prefer med-arb.
Proposition 1: Disputants prefer using
the med-arb procedure over the arb-
med procedure.
Of course, procedural designers and theorists
must consider factors other than disputant pref-
erence. Disputants may prefer a procedure that
maximizes the likelihood of a favorable out-
come, but such a procedure may not be in the
best interest of policy makers. For example, a
public sector union may be able to best achieve
favorable outcomes through conventional arbi-
tration, yet the state legislature may want a
procedure that lowers disputant expectations so
that the parties will seek voluntary settlements.
Policy makers also may want to promote inte-
grative agreements, which may not be likely
with conventional arbitration.
We next consider the implications of hybrid
procedural design for disputant expectations
and behaviors.
HOW HYBRID PROCEDURES AFFECT
DISPUTANT EXPECTATIONS AND BEHAVIORS
Disputant Expectations Regarding Outcomes
We expect that the choice of med-arb or arb-
med will have important effects on disputant
cognitions as the disputants seek favorable out-
comes. A critical determinant of whether dispu-
tants agree depends on whether their outcome
expectations create a positive "zone of agree-
ment" or "settlement range" (Walton & McKer-
sie, 1965). The zone of agreement is determined
by the disputants' respective resistance points-
that is, the point beyond which each will resist
making concessions. For example, suppose that
a company is negotiating with its union, and
management negotiators are unwilling to pay
employees over $9.00 an hour (their resistance
point). If employees are unwilling to work for
less than $9.50 an hour (their resistance point),
there is no overlapping zone of agreement, and
an agreement will not occur unless one side
changes its resistance point.
We believe that the arb-med procedure is
more likely to change the resistance points of
the disputants, leading to a greater probability
that an overlapping zone of agreement will ex-
ist. Several arguments support this assertion.
 420 Academy of Management
First, the characteristics discussed above that
make arb-med a less preferred procedure-the
prominence of the "threat" of an arbitration rul-
ing (in the envelope) during the mediation
phase, the reduced opportunity for outcome con-
trol through impression management, and so
on-also work to lower disputants' outcome ex-
pectations. Lower outcome expectations should
lead to an increased likelihood of a positive
zone of agreement and, thus, should produce
more cooperative behavior by the disputants.
Second, there is evidence that disputants in
arbitration settings overestimate their probabil-
ity of success (e.g., Neale & Bazerman, 1991), and
the med-arb procedure does little to address this
overconfidence. In fact, med-arb may heighten
overconfidence, because disputants who do not
settle in mediation can continue to direct im-
pression management attempts toward the third
party during arbitration and thereby continue to
bolster their false estimate of prevailing in ar-
bitration. In contrast, arb-med may cause dispu-
tants to actively consider the possibility of los-
ing: because a ruling already has been
rendered, the disputant must entertain the pos-
sibility that the ruling has been unfavorable.
Disputants may estimate the probability of an
unfavorable ruling and then adjust it during me-
diation, whenever the mediator offers positive or
negative feedback regarding their positions.
Proposition 2: Disputants have lower
outcome expectations in arb-med than
in med-arb.
Behaviors During the Mediation Phase
Cooperation. We expect hybrid procedures to
influence cooperative behaviors differentially
during mediation. If the arb-med procedure low-
ers outcome expectations, then it is likely that
disputants in arb-med will behave more cooper-
atively with each other than they would in med-
arb. This proposition is supported by research
on final offer arbitration (Coleman, Jennings, &
McLaughlin, 1993; Feuille, 1975), where the arbi-
trator can only pick one side's proposal; the ar-
bitrator is not permitted to fashion a different
settlement. Pruitt (1981) has reported that many
cases are resolved by the disputants after the
arbitration hearing is held but before a decision
is revealed to the parties. He suggests that "the
uncertainty produced by the prospect of final
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offer arbitration looms largest at the last minute,
when the arbitrator's award is at hand" (1981:
225).
Extension of this logic to the arb-med proce-
dure suggests that, having completed the arbi-
tration hearing and knowing that a decision has
been reached (but not yet revealed), the parties
should be experiencing great uncertainty. When
combined with the disputants' desire for out-
come control and lower outcome expectations
(as discussed above), the uncertainty over what
types of outcomes will be received should moti-
vate the disputants to reduce such uncertainty
by agreeing during the mediation phase.
The idea that uncertainty facilitates coopera-
tion also is supported by findings in cognitive
psychology. Shafir and Tversky (1992) have de-
scribed a one-trial prisoner's dilemma game,
where subjects were either aware or unaware of
their opponent's choice to compete or cooperate.
When subjects knew that their opponent had
made a competitive choice, only 3 percent re-
sponded with a cooperative choice. When sub-
jects knew that their opponent had made a co-
operative choice, 16 percent responded with a
cooperative choice. But, when subjects did not
know if their opponent had competed or cooper-
ated, 37 percent chose to cooperate. Shafir and
Tversky (1992) explain their findings in terms of
a disjunction effect, defined as follows: people
prefer choice a over choice b when X occurs;
they also prefer a over b when X does not occur,
but they prefer b over a when it is uncertain
whether or not X occurs (also see Tversky &
Shafir, 1992). The arb-med procedure sets up
similar dynamics for the disjunction effect. For
example, if we substitute "a favorable arbitrator
decision" for X, "compete" for a, and "cooperate"
for b in the above description of the disjunction
effect, we have a situation where greater num-
bers of disputants engage in cooperative behav-
ior when they do not know if the arbitrators'
decision will favor them or not.
Proposition 3: During the mediation
phase, disputants will engage in more
cooperative behavior in arb-med than
in med-arb.
Revealing information. An important part of
cooperation is revealing information. The re-
vealing of more information is associated with a
greater probability of achieving an integrative,
high-quality agreement (Pruitt, 1981; Thompson,
 2000 Ross
1991, 1998). Information sharing often occurs dur-
ing private caucuses with a mediator. Yet, dis-
putants may be reluctant to reveal information if
they fear that the third party might use that
information when making a subsequent arbitra-
tion ruling (Fuller, 1962). This apparent loss of
outcome control through exercising process con-
trol (revealing information in mediation) is an
inherent difficulty of med-arb. For example, sup-
pose that a union's bargaining position is that
workers need thirteen paid holidays. If union
leaders reveal to the mediator in a private cau-
cus that they will accept ten holidays, then they
may fear that the third-party might remember
this fact and rule for ten holidays if arbitration
becomes necessary. An arbitration ruling for ten
holidays would confirm this fear, even if the
third party based this decision on other criteria.
However, if an arbitration ruling already has
been made and nothing revealed during medi-
ation can influence that ruling, then there is no
incentive for withholding information during
mediation. Thus, arb-med should increase the
probability that a disputant will reveal confi-
dential information during private caucuses
with a mediator, or even to the other disputant.
Proposition 4: During the mediation
phase, disputants will reveal more
confidential information in arb-med
than in med-arb.
Receptiveness to mediator suggestions. One
strength of the arb-med procedure is that the
threat of losing in arbitration is salient to the
disputants, particularly if package final-offer ar-
bitration is used. This awareness and fear of
losing (loss aversion) should increase dispu-
tants' motivation to settle and make them more
amenable to mediator suggestions. However, re-
search also shows that motivation to settle
alone does not increase the likelihood of settle-
ment-disputants need specific guidance from
their third party (Ross, 1990). If disputants are
motivated to settle, then, when the third party
provides specific guidance in the form of sug-
gested settlements, the parties are likely to
make greater concessions to move toward the
suggested settlement point. The result of such
movement is the greater likelihood of agree-
ment. Researchers have observed that media-
tors frequently suggest settlements, so this is
not an uncommon behavior (Baker & Ross, 1992;
Kolb, 1983).
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and Conlon 421
Proposition 5: Disputants will respond
to mediator suggestions for settlement
with more concessions in arb-med
than in med-arb.
Proposition 6: Disputants will agree to
specific mediator settlement propos-
als more frequently in arb-med than
in med-arb.
There is, however, one circumstance in which
these propositions may not hold. If final-offer
arbitration is used in med-arb, the parties may
already be aware of the prospect of losing in
arbitration. The disputants may look to the third-
party suggestions during the mediation phase
as alternatives to losing in arbitration, and
these suggestions may hold substantial weight.
Thus, when final-offer arbitration is used, dispu-
tants may be responsive to mediator sugges-
tions with either procedure.
IMMEDIATE AND LONG-TERM OUTCOMES
Next, we focus on how med-arb and arb-med
may produce different outcomes- both long and
short term. We distinguish between these two
types of outcomes because it is possible that one
hybrid procedure may promote immediate out-
comes (e.g., the parties may be more likely to
settle the dispute), but, if the parties feel pres-
sured to settle, then that may have implications
for long-term outcomes, such as being commit-
ted to abide by the agreement (see Kressel &
Pruitt, 1989, for a discussion). We demonstrate
that arb-med tends to have several relative ad-
vantages with regard to immediate outcomes;
however, med-arb is more advantageous for
long-term outcomes.
Immediate Outcomes
Settlement frequency. One goal of dispute res-
olution systems is to encourage voluntary settle-
ments. This means that a settlement in the me-
diation phase, where the parties retain decision
control, is preferable to a settlement in the arbi-
tration phase, because the parties voluntarily
have agreed to the settlement and because sat-
isfaction and commitment tend to be high in
such cases (Kressel & Pruitt, 1989). We propose
that arb-med will produce a greater number of
settlements in the mediation phase than will
med-arb. Curry and Pecorino (1993) have noted
 422 Academy of Management
that in arbitrations over salary disputes in pro-
fessional baseball, the parties (who had previ-
ously exhausted negotiations) submitted sealed
final-offer bids to the arbitrator. However, prior
to receiving the arbitrator's decision, the parties
frequently displayed a burst of negotiation ac-
tivity, since they hoped to avoid an arbitrated
settlement (also see Burgess & Marburger, 1993).
The frequency of negotiated settlements that oc-
cur after an arbitration hearing but prior to
learning of the arbitrator's ruling suggests that
the separation of the arbitration phase and the
ruling phase inherent in the arb-med procedure
should facilitate voluntary agreements. Also, if
the parties have lowered outcome expectations
with arb-med (as described earlier), they might
be motivated to avoid using arbitration-
particularly if final-offer arbitration is em-
ployed.
Proposition 7: There will be more vol-
untary (mediated) settlements using
arb-med than med-arb.
Settlement quality. The quality or value of
settlements reached in the mediation phase
should be higher with arb-med than med-arb.
This idea flows from Proposition 4, which states
that disputants reveal more confidential infor-
mation in the mediation phase of arb-med. The
revealing of information is associated with a
greater probability of achieving an integrative,
high-quality agreement (Thompson, 1991; Wein-
gart, Thompson, Bazerman, & Carroll, 1990). In-
tegrative settlements, by definition, provide
greater total benefit (i.e., joint benefit to both
parties) than do nonintegrative settlements,
whether quality is defined in terms of joint pay-
offs or Pareto efficiency or creativity (cf. Tripp &
Sondak, 1992). If the parties share more informa-
tion, it follows then that the probability of
achieving a high-quality mediated settlement is
higher with the arb-med procedure.
Proposition 8: Mediated settlements
are likely to be of higher quality in
arb-med than in med-arb.
Speed and cost of settlement. Whereas Prop-
ositions 2 through 8 support the novel arb-med
procedure, the remaining propositions bolster
the better-known med-arb procedure. For exam-
ple, med-arb can be expected to be less costly
and to produce, on average, faster resolutions.
This expectation stems from the nature of the
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two procedures. Arb-med has both an arbitra-
tion hearing phase and a mediation phase in
every case. Only if the dispute is settled in me-
diation does the third phase, the ruling phase,
become irrelevant. However, with med-arb nei-
ther the arbitration hearing nor the ruling phase
is held if the dispute is settled in the mediation
phase. Because a majority of cases are mediated
successfully (Kressel & Pruitt, 1989), med-arb is
likely to produce faster resolutions than arb-
med. Moreover, since many external third par-
ties are paid a per diem amount, med-arb also is
likely to be less costly.
Proposition 9: On average, disputes
will be resolved more quickly in the
med-arb procedure than in the arb-
med procedure.
Proposition 10: The med-arb procedure
will produce lower financial costs
than the arb-med procedure.
Long-Term Outcomes
Justice beliefs. There are several reasons to
propose that med-arb will lead to greater long-
term perceptions of procedural and distributive
justice. Researchers have shown that having an
opportunity to present one's case (exercising
process control) enhances one's beliefs about
procedural fairness for both instrumental (out-
come-related) and value-expressive reasons (cf.
Folger & Cropanzano, 1996; Lind & Tyler, 1988).
Such beliefs enhance the likelihood that the pro-
cedure will be used for future disputes. Clearly,
under both procedures disputants have opportu-
nities to exercise process control. However, we
propose that, for instrumental reasons, dispu-
tants' perceptions of process control will be
greater with med-arb. As we discussed earlier
regarding impression management, the med-
arb procedure allows disputants two opportuni-
ties to present their case prior to the arbitrator
making a decision, whereas arb-med only al-
lows one such opportunity. Therefore, although
both procedures provide disputants with pro-
cess control, we anticipate that disputant per-
ceptions of such control will be greater with
med-arb.
The treatment received by disputants from the
third party also may influence their procedural
justice perceptions. The parties may view a third
party's request for a concession in the mediation
 2000 Ross
phase of arb-med as more threatening and ag-
gressive than the identical request in the medi-
ation phase of med-arb. In arb-med the parties
may view it as a harbinger of what will come if
no agreement is reached. This may lead dispu-
tants to perceive that they were treated with less
respect and dignity in the arb-med procedure.
Notions of respect or "standing" play a central
role in the interactional justice literature and in
recent models of procedural justice, such as the
group value model (e.g., Lind & Tyler, 1988).
Distributive justice judgments also are likely
to be greater in med-arb. Regarding outcomes
reached in mediation, disputants in arb-med
may feel pressured to agree because of specific
suggestions made by the third party, amplified
by the threat of the arbitrated decision that al-
ready exists but is not revealed. Disputants may
view any mediated agreement reached in arb-
med as "coerced," with a loss of outcome control;
this violates Leventhal, Karuza, and Fry's (1980)
justice criterion of bias suppression.
Arb-med may also negatively impact the per-
ceived fairness of arbitrated outcomes. Because
the outcome is determined prior to mediation, it
is not sensitive to concessions, procedural de-
velopments (e.g., agreeing to refer a matter to a
special committee), or relationship changes be-
tween the parties (e.g., agreeing to implement
integrative "win-win" bargaining) that may
have occurred during the mediation phase. This
may lead disputants to believe that the arb-med
procedure relies on less accurate information
(because the arbitrator made his or her decision
without the benefit of new information) or per-
haps is a procedure that violates prevailing
standards of ethicality (for the same reason).
Both accuracy and ethicality have been consid-
ered important fairness-enhancing criteria (Lev-
enthal et al., 1980). Thus, to the extent that arb-
med violates these normative expectations of
what a procedure should be, we believe that
disputants will view med-arb as more procedur-
ally and distributively fair.
Proposition 11: Disputants will report
greater levels of procedural and dis-
tributive justice in med-arb than in
arb-med.
Compliance with arbitrated outcomes. Fi-
nally, disputants' long-term compliance with
third-party-imposed outcomes is a persistent
problem. McEwen and Mciiman (1984) have re-
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and Conlon 423
ported that typical compliance rates are about
80 percent for mediation, versus only 48 percent
for adjudication in small claims court. Lind and
Tyler state, "Even when decisions are supposed
to be binding, as is the case in adjudication and
arbitration procedures, the enforcement of the
decision can be difficult in the face of active or
even passive resistance" (1988: 81).
Anecdotal evidence from financial securities
and automobile "lemon law" arbitration (e.g.,
Gold, 1988; Podd, 1997) also highlights that non-
compliance with arbitrator decisions occurs. In
the -labor-management field, noncompliance
may take the form of attempting to achieve con-
tract changes through the use of the grievance
mechanism. For example, a union might flood
the system with frivolous grievances dealing
with one contract clause in an attempt to force
the other side to renegotiate that clause. Alter-
natively, a union might turn to grievance arbi-
tration. For example, one public sector teachers'
union reportedly attempted to get smaller class
sizes through arbitrating grievances dealing
with class size under a "safe working condi-
tions" contract clause, after the union had been
unable to secure smaller classes when previ-
ously negotiating its contract (State of Califor-
nia, Department of Youth Authority and Califor-
nia State Employees Association, 1987).
We expect fewer arbitrated outcomes to occur
in arb-med than in med-arb, but we also expect
that disputant compliance may be more prob-
lematic. Disputants may view the decision im-
posed in arb-med as not reflecting the "new
understanding" reached in the mediation phase.
Earlier we discussed how one key element of
arb-med is that the third party's ruling cannot be
updated by any new information or insight dis-
covered in the mediation phase. This raises the
possibility that arbitrated decisions in the arb-
med procedure could include obvious oversights
or flaws that an arbitrated decision in med-arb
could avoid. Such flawed outcomes might lead
disputants to have a lower level of commitment
to imposed settlements in arb-med.
In addition, several authors have noted that
both procedural and distributive fairness judg-
ments are important determinants of decisions
to comply with third-party decisions (cf. Lind,
Kulik, Ambrose, & de Vera Park, 1993; McEwen &
Maiman, 1984). Pruitt, McGillicuddy, Welton,
and Fry (1989) compared mediation with med-
arb in community dispute resolution centers and
424 Academy of Management Review April

found that when disputants believe a procedure
is fair, they are more likely to comply with the
ruling or agreement resulting from that proce-
dure. As we stated earlier, the early loss of de-
cision control in the arb-med procedure may vi-
olate disputant expectations of what a fair
procedure should be. If disputants see med-arb
as a fairer procedure, they should be more likely
to comply with an arbitration ruling from med-
arb than from arb-med.
Proposition 12: Disputants will be
more likely to comply with arbitration
rulings issued in med-arb than in arb-
med.
DISCUSSION AND CONCLUSIONS:
A CONTINGENCY APPROACH
Table 1 summarizes our propositions. As indi-
cated in the table, arb-med's strengths lie pri-
marily in its inherent motivational capacity. By
appearing to threaten to reduce each party's
decision control, the procedure should lower dis-
putant expectations and produce uncertainty
among the disputants. These dynamics should
motivate the parties to maintain decision con-
trol. We predict that, in attempting to ensure
that they do not relinquish decision control, the
parties will be highly motivated to settle the
dispute during the mediation phase and will
demonstrate a variety of cooperative behaviors
in that phase. As a result, arb-med should pro-
duce a greater number of settlements in the me-
diation phase-settlements the disputants can
take the credit for (e.g., a union negotiator can
"sell" to his or her constituents) and will likely be
more committed to. Med-arb, however, typically
will be less costly and time consuming; lead to
enhanced levels of procedural justice; and, should
arbitrated decisions be imposed, lead to greater
compliance with arbitrated decisions.
In summary, we see that the greatest benefit
of the arb-med procedure is that it encourages
disputants to settle their differences themselves
(a short-term effect), whereas the greatest bene-
fit of the med-arb procedure may be enhanced
perceptions of fair treatment and greater com-
pliance with arbitral rulings (long-term effects).
The above description of relative strengths
strongly suggests that policy designers and/or
third parties should pursue a contingency ap-
proach to procedural selection based on the spe-
cific criteria, listed in Table 1, they want to max-
imize. This suggestion is similar to a
contingency approach to procedural selection
offered by Elangovan (1995, 1998). Building upon
the work of Thibaut and Walker (1975),
Elangovan has identified six decision attributes
that influence how much process and outcome
(decision) control should be granted to the dis-
puting parties and to the third party. Briefly,
these attributes can be organized according to
the following questions:
1. How important is the dispute?
2. How important is it to resolve the dispute
quickly?

TABLE 1
Listing of Effects and Which Procedure Is Likely to Produce the Effect

Relative Relative
Advantage to Advantage to
Proposition Arb-Med Med-Arb

1. Procedural preference X
2. Lower outcome expectations among disputants X
3. More cooperation between disputants in mediation phase X
4. More confidential information revealed to third party X
5. Disputants will make more concessions in mediation phase X
6. Disputants will agree to specific settlement suggestions X
made by third party in mediation phase
7. Frequency of settlements in mediation phase X
8. Mediated settlements of higher quality X
9. Speed of resolution of dispute X
10. Financial costs of procedure X
11. Perceptions of procedural and distributive justice X
12. Compliance with arbitrated outcomes X

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 2000 Ross
3. Does the dispute concern the application of
existing rules, or does it concern the alter-
ation of existing rules?
4. Do the parties expect frequent work-related
interaction?
5. Would the parties be committed to a settle-
ment imposed by a third party?
6. Is the probability high that the parties
would negotiate a settlement compatible
with the larger organization or system?
When med-arb and arb-med are considered in
light of these attributes, the situations favoring
each procedure become clearer. First,
Elangovan suggests that third parties retain
outcome control for important disputes. Third
parties in both procedures retain outcome con-
trol. Yet, if the potential loss of outcome control
is more salient with arb-med, and disputant ac-
ceptance of third-party proposals during medi-
ation is greater (Proposition 6), then arb-med
should be used with "important" disputes. Sec-
ond, med-arb produces a faster settlement than
arb-med and should be used when a quick set-
tlement is desired (Proposition 9). Third, either
hybrid procedure is adequate for developing or
altering existing rules (e.g., labor-management
contracts). Fourth, if the parties have an ongoing
relationship, either procedure is satisfactory;
however, med-arb may be preferred because of
its relative advantage for long-term outcomes.
For disputes where the parties do not have a
long-term relationship, arb-med may be more
satisfactory because it promotes information ex-
change, concession making, and a high fre-
quency of settlements (Propositions 4, 5, and 7).
Fifth, if the third party imposes a settlement,
compliance may be greater if med-arb is used
(Proposition 12), suggesting that med-arb be
chosen if compliance is a concern. Finally,
Elangovan's model suggests that if the parties
can find a solution that is compatible with the
larger system's goals, the third party should use
a procedure that yields more process and out-
come control to the parties. Such a procedure
heightens disputant perceptions of procedural
and distributive justice. Because med-arb ap-
pears to yield more control to the parties and
enhances justice perceptions, med-arb is pre-
ferred under these conditions (Proposition 11).
Thus, Elangovan's contingency approach offers
additional guidance as to when one hybrid pro-
cedure is preferable.
It is apparent that no single procedure-even
a single hybrid procedure-is optimal for all
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and Conlon 425
disputes. The set of propositions offered here
suggests that third parties be given authority to
determine which procedure should be used,
based on the criteria the third party wishes to
maximize. Thus, if long-term procedural justice
and compliance are issues of great concern, the
third party may choose to implement med-arb.
However, if the third party believes that the par-
ties have not been forthcoming with relevant
negotiating information, or if the third party
feels that obtaining a high-quality voluntary
settlement is paramount, then the third party
may prefer arb-med.
Obviously, in this note we have described
only the basics of each procedure and a few key
situational variables that might be relevant for
procedural choice. Many additional situational
factors might influence the effectiveness of and
satisfaction with each procedure. These range
from the context in which the intervention oc-
curs and the power differentials between dispu-
tants to the "style" with which a third party
implements any specific procedure (e.g., Arnold
& Carnevale, 1997). These factors cannot be con-
sidered here (for a review of such factors, see
Pruitt & Carnevale, 1993). However, this note
serves as a call for researchers and policy mak-
ers to consider these forms of hybrid third-party
procedures.
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William H. Ross is a professor of industrial relations at the University of Wisconsin at

La Crosse. He received his Ph.D. in industrial-organizational psychology from the
University of Illinois. His research interests include dispute resolution systems de-
sign, dispute mediation, procedural justice, and conflict management.

Donald E. Conlon is an associate professor of management at Michigan State Uni-

versity. He received his Ph.D. in organization behavior from the University of Illinois.
His research interests include third-party intervention in conflicts, justice perceptions
in a variety of contexts (e.g., downsizing, service encounters), intragroup conflict, and
organizational decision making.

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